:max_bytes(150000):strip_icc()/debt-Curly_photo-ddc9a28caf664852885037e89ff149a8.jpg "More Retirees Are Carrying Debt Than You Might Think—And It’s Not Just Mortgages")
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Key Takeaways
- Nearly 6 in 10 retirees carry debt, with a median balance of $32,050, according to Federal Reserve data.
- Credit cards are the most common type of debt in retirement, while mortgages tend to carry the largest balances
- With income often fixed, cutting expenses may help retirees manage debt, while some may turn to part-time work to bring in extra cash.
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Nearly 6 in 10 Retirees Still Have Debt
Retirement doesn’t mean the bills disappear. In fact, nearly 6 in 10 retirees carry some kind of debt, according to the Federal Reserve’s Survey of Consumer Finances.
Of respondents who identified as retired, 57% had debt in 2022, the most recent year available. The median balance—$32,050—has nearly tripled since 1989, underscoring how common borrowing has become even in retirement. (Medians are used here instead of averages to reduce the influence of exceptionally high or low balances.)
While retirees are less likely than working adults to carry debt—88% of employed and 78% of self-employed workers have balances—millions are still entering retirement with loans that can be harder to manage on fixed incomes.
Unlike workers who can boost earnings or take on extra hours, retirees typically rely on Social Security, pensions, and retirement accounts. That makes rising interest rates, higher monthly payments, or unexpected expenses more difficult to absorb.
Why This Matters
Carrying debt in retirement can leave less room to handle rising costs or unexpected expenses. Finding ways to lower payments or interest rates can help protect savings and reduce financial stress.
Credit Cards, Not Mortgages, Lead the Way
For many retirees, debt doesn’t stop at the mortgage—and in many cases, it isn’t led by mortgages at all.
Credit cards are the most common form of debt in retirement, with 32% of retirees carrying a balance, according to the Federal Reserve’s survey. Mortgages or home equity loans follow, held by 24.3% of retirees. Vehicle loans affect about 19%, while smaller shares carry education loans, home equity lines of credit, or debt tied to other real estate.
In other words, retirement debt is spread across multiple categories. While housing-related borrowing remains significant, revolving credit plays an even larger role for many households.
The size of those debts, however, varies widely. Median balances range from a few thousand dollars for credit cards to six figures for mortgages and other real estate loans, highlighting how different types of borrowing can shape retirees’ finances in very different ways.
| Typical Debt Balances Held by Retirees | |
|---|---|
| Debt Type | Median Balance |
| Credit card balances | $2,500 |
| Mortgages or home equity loans | $100,000 |
| Vehicle loans | $13,000 |
| Education loans | $20,000 |
| Home equity lines of credit | $27,000 |
| Other real estate debt (non-primary residence) | $158,000 |
“If a person’s already retired, they might not have a lot of choices,” said Steve Azoury, owner of Azoury Financial in Troy, Michigan. “If the income is fixed, if they’re on pensions and Social Security,” it’s harder to adjust when expenses rise or payments change in retirement.
Because of that, Azoury said, it’s important to look closely at how debt fits into a fixed monthly budget. “If you have $100 coming in, you can’t spend $120 going out,” he said. “The math doesn’t work.”
How to Tackle Debt in Retirement Without Derailing Your Income
Paying down debt in retirement is usually most effective when it starts with one goal: freeing up cash so you can pay down balances without adding new debt, Azoury said. He offered these tips:
Paying down debt in retirement is usually most effective when it starts with one goal: freeing up cash so you can reduce balances without taking on new debt, Azoury said. That often means looking at both sides of the equation—income and expenses.
- Bring in more income: For some retirees, that means taking on short-term or part-time work. A side gig, a seasonal role, or another temporary job for a few months can generate extra money specifically to put toward paying down debt, he said.
- Shop wisely: Planning purchases and buying frequently used items when they’re on sale can help keep regular spending in check, Azoury said. If you have the space, stocking up on nonperishables at a warehouse club like Costco or Sam’s Club may help lower weekly and monthly expenses compared with making more frequent, smaller trips that add up over time, he said.
- Reevaluate recurring expenses: Reviewing auto insurance deductibles and optional coverage can be one of the fastest ways to reduce fixed costs, Azoury said. If you have a low deductible, such as $250, the difference in your premium compared with that for a $1,000 or $2,500 deductible might be substantial. Removing infrequently used items from your policy, such as rental car coverage, can also reduce costs. “If you start going through a lot of the expenses, I think you’ll find savings that may alleviate some of the pain,” Azoury said.
- Lower your interest costs: Retirees should treat borrowing like any other major purchase, Azoury said, by shopping around for better rates and asking detailed questions. “You wouldn’t just walk in and say, ‘I want that.’” That means asking: What does it cost? If I’m borrowing money, what are your fees? What’s your interest rate? Can you change the interest rate?
Read the fine print. In addition to asking questions, closely review loan terms and the annual percentage yield (APY) on savings, Azoury said. He cautioned that short-term promotional offers—or ‘teaser rates’—can be appealing on savings accounts or certificates of deposit (CDs) but may not last. To avoid any surprises, read the terms carefully. “I always say: ‘The big print giveth. The small print taketh away.’”
Not every strategy will work for every household, and retirees should weigh options—such as raising deductibles, taking on part-time work, or changing spending habits—against their health, savings, and risk tolerance.
